Jeff Judy

Jeff's Thoughts - April 4, 2018

Compensation, Hiring, and Retention

We have touched on the tight labor market a couple of times in recent issues of Jeff’s Thoughts. It is harder to find, and harder to keep, good credit staff when they have so many options, within and outside of our industry. I hear reports that postings for commercial loan officers and credit analysts, essential cogs in the credit process, are particularly difficult to fill.

At many institutions, this situation conjures up visions of bidding wars. And smaller institutions, like community banks and credit unions, often feel themselves to be at a distinct disadvantage when trying to match the salaries offered by the big banks.

Some clever organizations, however, have realized that “compensation” doesn’t have to be just about money. And a broader perspective on what you can offer a new hire is even more important when you take into account the generational shifts in the expectations potential employees bring to their interviews and to their jobs.

Of the older generation that is in charge at most institutions, younger people sometimes say that “they live to work.” By that they mean that for baby boomers and perhaps the generation right behind them, their jobs were a major part of their personal identity. They are what they do, to a large extent.

By contrast, these younger candidates for your open positions “work to live.” They are not defined by what they do for a living. They see their work as a practical exchange with the employer that enables employees to do things they want to do, buy things they want to have, and experience events they want to enjoy.

And while money can help them get what they want, so can more free time. What if you offered your employees, and especially those new recruits you are competing with rivals to hire, a few more vacation days each year? What if your personal leave options were a little more flexible than your competitors’? I have had conversations with “early career” financial services staff who are taking advantage of the tight labor market to explore options, and they seem much more interested in the total compensation picture – salary and vacation and PTO and other benefits – than many of the managers I talk with seem to realize.

The same big picture approach can help you with retention. For instance, employee development and training can be a major contributor to job satisfaction and positive feelings toward an employer. Employees recognize regular training as an investment in them, that is, as a sign that their employer values them. It contributes to the employer-employee relationship, boosting satisfaction and loyalty in ways that complement any adjustments in salary over time.

To win the best employees from the pool of available applicants, think about what they want, and do not assume that they want the same things (in the same rank order) as you did when you started out. Times have changed, and you will beat the competition when you apply some creativity to the concept of “compensation.” Listen to your applicants and your younger staff, adapt to the new hiring landscape, and you may be pleasantly surprised to discover that you can win some “bidding wars” without paying a large premium over the salaries offered by your competitors.